written by: Jason C. Chavis•edited by: Laurie Patsalides•updated: 4/28/2010
As the world economy continues to expand and become more closely associated, the e-commerce impact on the global market is profound. Nations far removed are capable of trading and establishing business relationships in ways they could not have before.
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Basic Considerations for E-Commerce Companies
When an investor is interested in adding an e-commerce company to his or her portfolio, there are many issues that one must assess when making a decision. The global market for e-commerce is in its developing stage, especially in emerging markets. While basic web design issues may seem important, it is necessary to evaluate other aspects of the platform, namely the channel of distribution.
Each nation has a different legal system by which e-commerce operates. In addition, basic political concerns such as banned products are important for an investor to valuate the success of the security. Other information an investor must look for is the basic infrastructure being used. Some countries primarily use dial-up phone lines, while others have more advanced forms of networks, impacting the availability of the website to the average consumer and thereby impacting the return on the investment. In any case, the e-commerce impact on the global market in the 21st century is significant.
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Drawbacks of E-Commerce
Investing in e-commerce has a number of drawbacks, most notably those impacting the limits of its success on the global marketplace. The primary concern for companies operating in the e-commerce field is language barriers. While English has become the dominant form of communication on the Internet, the majority of the world does not speak the language. Other things to look at are the cultural barriers present between certain distributors and purchasers. For example, business in many Eastern Asian nations is usually conducted on a more personal basis. This limits the impact e-commerce can have in this section of the global marketplace.
Other concerns regarding e-commerce impact on the global market are simple economic disparity issues. Credit cards, the major form of purchasing power used on the Internet, are far less saturated around the world, especially in emerging markets. This limits the availability of e-commerce to these countries. Also, personal computer ownership is far less substantial in many nations, again dwindling the available market.
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How Investing in E-Commerce is Beneficial
E-commerce companies have the possibility of creating some of the largest companies in the world. If the firm building the web-based company can transcend the problems associated with the market, potential is nearly endless. Besides North America and Europe, the larger world is readily expanding into the Internet marketplace. In particular, Latin America is one of the fastest-growing regions in the world in regards to online sales. This area is generally limited in regards to its rules and regulations and has the benefit of lower shipping costs than many overseas markets. Net fever continues to expand in Latin America, particularly in Brazil, which is estimated to be responsible for nearly 90 percent of all online sales in South America.
The impact of e-commerce in terms of global investing is poised to become a major factor as the economy of the world expands and merges.
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"Impact on Global E-Commerce" All Business: http://www.allbusiness.com/technology/internet-technology/601851-1.html
"The Impact of E-Commerce on Business" The Times 100: http://www.thetimes100.co.uk/theory/theory--the-impact-e-commerce-on-business-activity--171.php
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Credit card. (Supplied by Fosforix at Flickr; Creative Commons 2.0; <div xmlns:cc="http://creativecommons.org/ns#" about="http://www.flickr.com/photos/fosforix/3007393167/">)